Fiscal Expenditure Responsibility Division And The Supply Of Basic Public Goods

Since the Tax-Sharing Reform in 1994,although the system of income division below the provincial level has become increasingly clear,the definition of responsibility for fiscal expenditure below the provincial level remains rather vague.The phenomenon of expenditure responsibility pressed down layer by layer is widespread,which not only aggravates the financial difficulties of the grassroots government,but also reduces the supply level of basic public goods.In the past,the literature mostly studied the impact of the division of expenditure responsibility on the supply of basic public goods from a qualitative perspective.This paper uses quantitative methods to estimate and enrich the existing literature.In addition,this paper has guiding significance for the reform of the division of expenditures below the province that has been explored in many provinces since 2016.Based on the reform of the expenditure responsibility division that was first implemented in Hebei Province in 2009,this paper uses the Difference in Difference method to explore the impact of clear division of administrative rights and expenditure responsibility on the supply of basic public goods.In order to enhance the comparability between the experimental group and the control group,this paper selected Hebei Province and its surrounding five provinces,and used the county-level panel data from 2005 to 2015 for analysis.The study found that the reform of expenditure responsibility division has significantly improved the supply level of grassroots government's education and medical basic public goods,and the above conclusions have good stability.This is mainly because the reform of expenditure responsibility division can not only increase the investment level of education and medical basic public goods,but also improve the efficiency of local government education and medical supply.Heterogeneity tests found that the place's education with lower financial self-sufficiency or lower level of economic development increased more;however,medical care did not differ significantly due to differences in financial self-sufficiency and economic development.In order to improve the supply level of basic public goods such as education and medical care at the grassroots level,we should start from the following four points:First,quantitatively divide the expenditure responsibilities between governments at all levels in an institutionalized form,comprehensively cover all basic public goods expenditure items.The second is that the reform of the expenditure responsibility division should be carried out at the same time as the fiscal revenue reform,so that when each expenditure responsibility item is divided,the corresponding fiscal revenue reform measures such as transfer payment should be carried out.Third,the reform of the division of administrative rights and expenditure responsibility should be carried out simultaneously.The grassroots government is not only the subject of the administrative rights,but also the main body responsible for ftulfilling the expenditure responsibility;the fourth is to strengthen the top-level design of the central level system and coordinate the reform of the expenditure responsibility division below the provincial level.